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Bill would force bids on public work, like LHA rehab

By Lyle Moran, lmoran@lowellsun.com

Updated:
04/29/2013 06:35:24 AM EDT

LOWELL -- A state representative from Northampton has filed legislation that would make it illegal for public agencies in the state to complete major construction projects without a public bidding process -- much like the Lowell Housing Authority did during its $6 million renovation of North Common Village.

Instead of seeking bids and signing contracts, the LHA turned to in-house and local union employees temporarily brought on board, known as "force-account" labor, to complete the rehab of 132 North Common units from 2008 to 2011 with federal funds.

The "force account" approach is allowed by two government agencies regulating housing authorities -- the U.S. Department of Housing and Urban Development, known as HUD, and the state's Department of Housing and Community Development.

Those agencies' approval of the practice comes despite Massachusetts' public-construction bid laws requiring contracts for work of $25,000 or more to be awarded to the "lowest responsible and eligible bidder" on the basis of competitive bids.

Democratic state Rep. Peter Kocot's legislation would make it illegal for public agencies to use a "force-account practice" or a similar practice not in line with the state's public-construction bidding laws for any construction work costing $100,000 or more.

Work costing less than $100,000 would only be allowed without bids if it were emergency construction or repairs to address any immediate and significant threat to employees of a public agency or the agency's tenants.

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The penalties for violating the prohibition against skirting bids for larger projects or ordinary repairs would be imprisonment of not more than six months, a fine of not more than $2,000, or imprisonment and a fine.

Kocot, chairman of the Legislature's Joint Committee on State Administration and Regulatory Oversight, said he filed the bill because he was made aware of some instances in which public agencies were completing major construction projects over multiple years without seeking bids or using normal procurement methods.

"We, as legislators, have an interest in making sure, when public construction takes place, the procurement process is transparent and all contractors seeking business are treated fairly," Kocot said. "We also want to make sure public dollars are spent well across the commonwealth."

The Northampton representative did not identify the projects that brought the no-bid construction issue to his attention, but said in some instances, investigations are ongoing.

The Sun has reported there are several active government probes into the LHA's no-bid North Common renovations, as well as other procurement issues at the LHA.

Kocot emphasized that his bill would apply to more than just housing authorities. He said he is currently working with the state Inspector General's Office on a redraft of the legislation.

The bill has been referred to the administration and oversight committee that Kocot chairs, and a public hearing should be scheduled for later this year, he said.

The Massachusetts chapter of Associated Builders and Contractors, which advocates for open-shop construction firms, is a strong supporter of Kocot's bill, said Greg Beeman, the group's president.

Beeman said the construction industry had no idea about housing authorities using no-bid union labor until The Sun's report about the LHA's North Common work.

He said the myriad issues with the North Common project -- such as 132 units completed and occupied without occupancy permits, electrical-code violations and the installation of illegal stoves -- demonstrate the importance of a public-bidding process to ensure not only that public dollars are spent wisely, but that public construction work is done well.

Force-account projects allow public-agency employees to serve as general contractors.

"It would have been significantly less likely for the type of glaring problems in Lowell to have occurred if the North Common project was completed under the purview of the state's bidding laws and experienced contractors were involved," Beeman said.

Beeman said he is hopeful the force-account issue gets addressed either legislatively or by the Inspector General's Office or Attorney General's Office, which The Sun has reported are probing the LHA.

Lowell City Councilor Rodney Elliott, who was critical of the LHA's no-bid North Common project last year during council discussion, said Kocot's bill is a good idea.

"All public construction projects should be bid to ensure the best quality and the best price," Elliott said. "To not publicly bid projects makes no sense."

LHA Executive Director Gary Wallace said Friday he anticipates Kocot's bill will generate a good policy debate, and expects private construction firms will advocate for its passage.

But Wallace said certain capital-improvement projects lend themselves to the use of the force-account method, especially those requiring detailed coordination with agency tenants. He has previously said he supports force-account projects because they help the authority save money by eliminating overhead costs, and they boost the local economy.

"The North Common Village renovation, permitting issues aside, was a clear example of how the use of force account labor was a valuable tool to the agency," Wallace said in a prepared statement. "Further the LHA is proud of the quality work the local labor unions have supplied us with for over 30 years."

The leader of the group representing more than 240 housing authorities in the state said his organization did not know about the bill until alerted by The Sun.

Thomas Connelly, executive director of the Massachusetts chapter of the National Association of Housing and Redevelopment Officials, said the organization's legislative committee has since begun a review.

"In the past, (force account) has been a successful tool for a number of authorities, but we are taking a look at the language in the bill," he said.

Rhonda Siciliano, a HUD spokeswoman, said she could not comment on proposed legislation.

Housing authorities are expected to conduct a cost-and-price analysis to determine if utilizing force-account labor on federal projects would be more cost-effective than going out to bid, Siciliano previously told The Sun.

Matthew Sheaff, a spokesman for the state's Department of Housing and Community Development, said he could not comment on pending legislation. A DHCD official previously told The Sun that force-account projects that go beyond regular unit turnover or other small projects must be signed off on by DHCD staff.

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